O'Donnell Kerr Financial Planners
  • 20 April, 2015

This is why the "dole" is not an early retirement plan!

I want to retire early, I have worked for 40 years and I am starting to feel tired and demotivated. Can I retire at the age of 60?

This is a question that gets asked by lots of people and answer is, “it depends”. If you are financially independent, which will enable you to pursue your dreams and you have a well-structured life plan, by all means early retirement can be an extremely attractive option.

However, for some people who look to retire early, part of their life plan from a financial perspective includes applying for Newstart allowance – the government’s fancy name for the “dole”.

Just because a person reaches the age of 60, is now able to access their superannuation (or at least part of it), does not mean that they should view Newstart as an early age pension payment to supplement their superannuation.

The payment of the Newstart allowance comes with some obligations which can restrict your activities in retirement.

All “job seekers” without an exemption – and being over 60 is not an exemption – will need to enter into an Employment Pathway Plan (EPP) which is created for them. If a person is not prepared to enter into an EPP and comply with the terms set out in the plan, they will not qualify for a Newstart payment.

The EPP outlines a person’s mutual obligation requirements. In other words, what activities they will be required to undertake. The activities are quantifiable and specific and can include specified number of job searches, work for the dole, voluntary work, Community Development Employment Projects, training under the Skills for Education and Employment program, Drought Force, Green Corps etc. The list does go on and will not necessarily leave a lot of time for you to fully enjoy your “early retirement”.

For the person who plans to travel around Australia on the “dole” in the newly acquired campervan, moving into an area of lower employment prospects can also come with some dramas.

The “dole” is paid on the basis that you are unemployed and actively looking for work – not early retirement – so moving to an area of higher unemployment is not viewed all that well and may result in your “dole” being suspended.

The “dole” does not pay well either; for a couple it is $24,100 pa and, for the single early retiree it is $13,300 pa.

Now I know you are going to say “but I watch A Current Affair and Today Tonight and they always have stories about how people are living on the dole in some very nice beachside community and have been doing so for years”! I always view these stories with a deal of scepticism because they have a tendency to not tell the whole story… and really, do you want to be viewed in the same light as “those bludgers”? I would hope not.

At 60, after working for over 40 years in some cases, you do have every right to start to feel a little tired, maybe bored and demotivated, but supplementing early retirement with the “dole” is not the answer.

Re-examine your life, as I am often reminded by a friend of mine, look for the passion that you had when you were 20 or 30.

Being 60 is not a reason to believe your working life has come to an end. If you are bored and demotivated, then it may be time to look for a new job or to retrain in a new skill…early retirement on the “dole”, after a period of time on limited funds and meeting the required mutual obligations of an EPP, can be just as demotivating.

Realise your Dream

The Realise Your Dream blogs are written by Peter Kelly and Mark Teale. More information about the authors can be found here

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